Good news! Used vehicle prices remain at a historically high level with only a small drop of 1.1% in August, matching the average rate of loss in June and July. This comparatively light drop in August (prices fell 1.5% and 2.3% for the month in 2012 and 2011, respectively) lifted NADA’s seasonally adjusted used vehicle price index to 124.8, the highest level recorded so far in 2013.

In Guidelines, our monthly automotive market report on new- and used-vehicle sales trends and used-vehicle price movement, we explored the biggest question for this trend: why?  In a sentence, an ongoing release of pent-up demand, historically low interest rates, and heated competition among lenders eager to grow loan portfolios continue to fuel strong used vehicle prices.

Historically, the fall and winter months are the softest time of year for used vehicle prices, partly because rental companies increasingly offload year-old units to make room for new models. Plus, consumers shift their focus to the start of the new school year and the upcoming holiday season.

Even with these factors, NADA predicts that the rate of decline will be considerably less than what has been recorded for this period. Again, we aim to answer why: we expect the rate to be less this autumn in large part because of ravenous consumer appetite for used vehicles fed by incredibly favorable credit conditions.

For the fourth quarter, NADA projects that the average rate of decline will fall within a range of 1.6% to 1.9% with the largest drop in price occurring in October.

Interested in more from this issue of Guidelines? Click here to download and read about NADA’s analysis and forecast for the remainder of 2013.